The level of attention to the recent and mild inversion of the yield curve has bordered on hysteria in the media. Does it portend a recession? Or is, as Ethan Harris, the chief economist of Lehman Brothers suggests, the bond market simply on drugs? This week we pause in our series on trade deficits to look at the real meaning of the yield curve and what it does and, just as importantly, what it does not mean. I give you a basic primer on the yield curve, as well as links to more information than you ever wanted so you can read morefor yourself.
But first, thanks to all those who purchased a copy of Just One Thing this year. My editor tells me sales are doing very well, and another publisher has picked up the Chinese and Korean language rights. Thanks to a lot of word of mouth, like this note from Paul Howard: